Gold Soars To End Well Above $1,200 An Ounce

(RTTNews) - Gold futures surged to end at a one-month high on Monday, after Swiss voters rejected a proposal to increase the gold reserves held by its central bank and on some soft manufacturing activity out of the U.S. and China.

Investors also favored the precious metal as the dollar trended lower against a band of select currencies, with Japan's credit rating slashed and global equity markets dived.

On Sunday, Swiss voters in a referendum rejected proposals to hike the gold reserves held by its central bank to at least 20 percent, up from the current holding of 8 percent. The proposal was rejected by 77 percent of the voters. If the initiative was approved, then the Swiss Central Bank would have had to buy about 1,500 tons of gold in a period of five years.

Meanwhile, an official report showed Chinese manufacturing activity in November to have slipped to an eight-month low, while activity in the U.S. manufacturing sector grew at a slightly slower rate in November with the index of activity in the sector dropping less than anticipated.

Adding to the lure of gold was the cut made by Moody's Investors Service Monday to Japan's credit rating by one notch to A1 from Aa3, with a stable outlook. The rating agency cited "heightened uncertainty over whether the government can attain its medium-term deficit reduction goal," and uncertainty about the timing and effectiveness of measures to boost economic growth as key drivers for the downgrade.

Gold for February delivery, the most actively traded contract, soared $42.60 or 3.6 percent to settle at $1,218.10 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

Gold for February delivery scaled an intraday high of $1,221.00 and a low of $1,141.90 an ounce.

On Friday, gold futures ended slightly lower at $1,175.50 an ounce, down $8.70 or 0.73 percent.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged further down to 717.63 tons on Monday, from its previous close of 720.91 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 87.84 on Monday, down from its previous close of 88.22 late Friday in North American trade. The dollar scaled a high of 88.45 intraday and a low of 87.78.

The euro trended higher against the dollar at $1.2490 on Monday, as compared to its previous close of $1.2465 late Friday in North American trade. The euro scaled a high of $1.2506 intraday and a low of $1.2420.

In economic news from the U.S., a report from the Institute for Supply Management showed the index of manufacturing activity fell much less than anticipated in November, edging down to 58.7 from 59.0 in October. Economists expected the reading to drop to 57.8 in November.

From the eurozone, results of a survey by Markit showed eurozone manufacturing to have barely grown in November, hurt mostly by contractions in Germany, France and Italy. The final Eurozone Manufacturing Purchasing Managers' Index for November dropped to 50.1 from 50.6 in October. This was weaker than the flash estimate of 50.4.

Meanwhile, Germany's manufacturing activity declined in November, with production growth at its weakest pace in more than a year with new orders declining at the fastest pace in nearly two years. The Markit/BME German Manufacturing Purchasing Managers' Index declined to a 17-month low of 49.5 from October's 51.4.

From Asia, a report from China's Bureau of National Statistics showed manufacturing activity in November was downwardly revised to 50.3 from 50.5 in October.

China's manufacturing purchasing managers' index slipped to an eight-month low of 50.3 this month, below expectations for a reading of 50.5 and down from 50.8 in October.

The China HSBC final manufacturing PMI hit a six-month low of 50.0 in November, unchanged from a preliminary estimate and down from 50.4 the previous month.